Gregoire cuts spending, but not by enough

Gov. Christine Gregoire took a necessary step when she ordered the state to stop most new hiring, personal-service contracts and nonessential travel, and to cut the use of gasoline. We are in a recession, and government has to trim its appetites. But don't think the state's action solves its whole problem.

Victor Moore, director of the Office of Financial Management, says Gregoire's order could save $300 million in the two years starting July 1, 2009. The Senate Ways & Means Committee estimates the deficit in that biennium at $2.7 billion.

Gregoire's order solves only a fraction of that problem. The governor is legally obligated to solve the whole problem, and will have to do so in a budget Moore will present in December.

Moore says he is confident he can craft one that has no increases in the sales tax, property tax and business gross-revenue tax — the three big taxes that pay for most of what the state does. Gregoire has promised not to raise these taxes except as a last resort.

Last time the state was in a recession, in 2003, Gov. Gary Locke presented a no-new-taxes budget that many thought the Legislature would toss. It didn't.

Locke's proposal was reshaped by Sen. Dino Rossi. The Locke-Rossi budget slowed spending in order to avoid draining the economy with tax increases — a decision that turned out well. The private economy grew briskly in 2004, 2005 and 2006, and state revenues went up.

It's a good strategy again, but not an easy one. State-employee unions have the right to bargain over pay. They didn't in 2003; they are bargaining now. Presumably, their pay will be protected by contract.

The Senate's forecast assumes pay increases of 1.7 percent in each of the next two years; if the state agrees to more, the deficit rises. The forecast also assumes the state will continue paying a very generous 88 percent of health-care costs. The state might have lowered that to balance the budget. It did so in 2003, but last month the state agreed to leave it unchanged.

The state has to be tough. It has to enforce Gregoire's freezes on the agencies she controls and arm-twist the ones she doesn't. It has to be hard at the bargaining table.

Everything it does between now and January has to be with the purpose of giving legislators the freedom not to lay new burdens on an economy in pain.